Cashing in on Attention and Reputation

Continuing our discussion of Chris Anderson’s study of free stuff…

If we can geek out for just a moment, the most poignant insight from Anderson’s article can be summed up as follows: as digital distribution drives down the costs of distribution and production,  the rules of supply and demand are no longer applicable to goods and services (since there’s essentially no limit on “supply”). In these economies, the assets that are in limited supply – and thus, what you’re competing for – are reputation and attention. When you think about it, this makes sense for the digital economy: the major moneymakers hold a near monopoly on either their reputation for being relevant/trustworthy (which gets you the top result spot on Google, for example) or their ability to attract attention (which can be defined as anything from traffic to engagement).

Gahhh, we’re getting deep! Don’t worry about those heavy thoughts for now; instead, let’s focus on whether “free” marketing can generate either reputation or attention, and how these assets can be monetized for your clients.

Let’s start with what Anderson calls “Freemiums,” since it’s something close to our hearts as marketers. In essence, Freemium means the basic service is free, but you’ve got to pony up for the full service. A popular example is Flickr, who offers a free account to get users stoked on uploading, tagging, geotagging, sharing, and networking with their photos. After playing around with the free account for long enough, Flickr’s willing to bet you’ll drop a measly $25 per year to get unlimited storage, archiving, statistics, and other features.

Essentially, it’s sampling meets exclusive services, two things that we’re very familiar with ’round these parts. The free part’s easy; it’s coming up with a compelling and relevant “exclusive service” that’s tricky. One smart suggestion: hyper-personalization, for a price.  From Wired’s Kevin Kelly:

A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room — as if it were [performed] in your room — you may be willing to pay a lot… A free movie you buy may be cut to reflect the rating you desire (no violence, dirty language okay).

This process is ideal for driving trial and new product introductions: you’ll enable the consumer to get familiar with your service/product (a.k.a. getting the aforementioned “attention”), you’ll build affinity/enthusiasm by offering a taste of the services for free (a.k.a. building the aforementioned “reputation”), and – if all goes well – you’ll be able to capitalize on this affinity/enthusiasm by offering exclusive, desirable benefits for an added price.

So far, it looks like there’s money to be made from free. More on the subject tomorrow.